final report - osvaldas banys & petru simion

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Osvaldas Banys, Petru Simion ET – Sem. III, International Class [Class] [Class] Management, Poul Lundberg Andreasen Deadline: 8th of December, 2014 [Deadline]

Bike’nCharge – UTASBERRY

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Bike’nCharge – UTASBERRY

___________________

Petru Simion

Date: 08.12.204

___________________

Osvaldas Banys

Solemn Declaration

I solemnly declare that I have personally and independently created this report. I have clearly marked any and all quotes in the text as such, and neither the report nor any essential parts of it are at present or have previously been submitted for any other examination.

I am aware that any violation of the rules on academic integrity shall be treated in accordance with

Article 19 of the Danish Order No 1016 of 24 August 2010 on Tests and Examinations in vocational

educations.

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Table of Contents

1. Synopsis .............................................................................................................................................. 4

2. Introduction ........................................................................................................................................ 6

3. General company description ............................................................................................................ 7

4. Products .............................................................................................................................................. 9

5. Industry overview ............................................................................................................................. 13

5.1. Prediction model .................................................................................................................. 14

5.2. Survey ................................................................................................................................... 15

6. Competition ...................................................................................................................................... 17

7. Marketing plan ................................................................................................................................. 18

7.1. Promotional strategy ........................................................................................................... 18

7.2. Pricing ................................................................................................................................... 19

7.3. Target market ....................................................................................................................... 20

7.4. SWOT analysis ...................................................................................................................... 22

7.5. FAB analysis .......................................................................................................................... 23

7.6. PEST analysis ........................................................................................................................ 24

8. Financial plan .................................................................................................................................... 28

9. Conclusion ........................................................................................................................................ 32

10. Figures, graphs and tables .............................................................................................................. 33

11. Bibliography .................................................................................................................................... 34

12. Appendices – Survey & Budgets ..................................................................................................... 35

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1. Synopsis We will demonstrate our knowledge and understanding of management, combined with electronics

and microprocessors principles required for this project, by undertaking the design process for a Bicycle

Dynamo – USB charger for smartphones.

The purpose of a bicycle dynamo is to power the bicycle’s lights. Through this concept the dynamo

maintains its main role, but at the same time provides you with the functionality of being able to charge

your phone using the power generated from spinning the wheels. In order to make it more customer-

friendly, the kit also contains a small LCD, which provides the user with data regarding:

battery level

speed

outdoor temperature

headlights status (ON/OFF)

Taking in consideration that there are more than 650.000 bikes, only in Copenhagen, you can get an idea

of the significant growth in the cycling industry; therefore the idea of improving and adding new

functionalities to this vehicle. Such devices have been on the market for a few years now and there are

several models which can be acquired for a price varying from 350 up to 1200 DKK, depending on the

specifications of the device.

We will demonstrate the improvements which can be made on such a device and their impact in

offering a more convenient product for the daily user. The cables and connectors will be, as much as

possible, integrated in the bicycle’s structure, without any significant exposure to the atmospheric

circumstances. Moreover our LCD is easily detachable and can be worn as a regular watch, when not

used on the bicycle.

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We decided to startup the business in Denmark, as a partnership business, meaning that it will be

registered as stated in the Danish laws. The online shop will be created as well, and we will ship

products all around the world. The project will also describe all the P&P options and how we will

advertise our product. In order to face our competitors, we will be offering a lower price product with a

good quality and functionality.

Due to a rapid development of digital techniques in a wide range of fields, we believe that the

implementation of this product will provide us with a positive feedback and a financial gain. Both, within

a relatively short period of time.

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2. Introduction This report is brought to you as a collaboration between Osvaldas Banys, Petru Simion and it primarily

addresses people who are interested in getting a better understanding of how to start a business, plan it

and eventually make a profit out of it. This includes students, teachers with a specialization or interest

within this matter and not only.

The primary purpose of this assignment was to:

Start our own company which manufactures a certain range of products

Work with basic principles of management

Put in practice the knowledge gained during class assignments

Learn more about marketing strategy and its importance

Study the current industry and anticipate what will come up next

Write a firm budget to cover all of the overall expenses

Get acquainted with structuring such a project

This report represents a complex 3rd Semester assignment and by finalizing it we hope to obtain a well

written paper, which fulfils the specified requirements, within the given time frame of approximately 2

months. At the same time it stands as a helpful tool in getting familiar with the upcoming internship,

which may involve a touch of management knowledge, and with the procedure of our very last exam, as

well.

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3. General company description About the company

Under the name of Bike ‘n Charge, our company has its headquarter based in Copenhagen, Denmark.

The company manufactures, assembles and sells a touchless bicycle dynamo that is capable of charging

a rechargeable battery. In addition to that we can offer more products to our customers: bicycle

computer, spare components and etc.

Bike ‘n Charge manufactures its devices at KEA. At this institution we use qualitative compatible and

productive equipment, provided to us by well-known suppliers. Therefore we can offer our customers a

much better quality at a low price.

Ownership

Petru Simion and Osvaldas Banys have registered the company – Bike ‘n Charge, in Denmark as a

partnership business for operating the business, according to the applicable laws. The allocation of

profits and losses, management and operation of the partnership is set forth in a written "partnership

agreement", signed by both partners. All of the earnings within the partnership are allocated and taxed

directly to the individual partners, this being one of the reasons why this form of business was chosen,

over others, such as a corporation.

We agreed to have an ownership as a rule of 50/50, without any requirements regarding a minimum

capital of the business.

Who are our customers?

The product we offer is intended for active and new technology friendly people. The number of

smartphone users is increasing year by year. At the same time, these devices are always improving,

being able to offer more features with more applications, and therefore making the consumer's life

much easier. However, as the usage of your device increases, so does the power consumption, resulting

in a short battery span, which is in fact the biggest disadvantage of owning a smartphone.

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Why we started?

We decided to start this business in order to provide a solution to the matter just brought into question:

smartphones with short battery life. The current market already offers similar devices, like power banks,

however it was not what we wanted. A power bank has to be charged the same as a phone.

Inspired by the Danish culture, which involves riding a bike to work or school every day, we thought, to

give the bicycles an additional feature, by using the energy that can be created from the spinning wheels

to charge a power bank. We tried to look for existing products similar to what we wanted; however, we

did not find any available ones for a reasonable price. In consequence we decided to manufacture

ourselves a product and now we want to offer it to others!

Mission

What we do, is to provide an easy solution for a universal problem, by involving and at the same time

promoting the usage of green energy. The product can reach a very wide area of potential clientele,

being able to satisfy the market’s request. The less obvious purpose of our company is to also make

people more aware about their environmental contribution. It would help them see how easily they can

contribute and how daily activities can be even more benefic.

Vision

At the same time, we aim to become a well known provider, with a large and loyal number of

customers, within less than 5 years from the launch of the very first product. Building a strong

reputation of a reliable company, will be the goal we reach for. In the beginning we start with only 2

packages, but in the future we see ourselves developing other related devices that could facilitate our

costumer’s needs. At that point we would already have a strong network within the market, making it

easier to present future products.

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4. Products UTASBERY - What is it?

UTASBERY is a powerful touchless magnetic electrical generator that generates energy from a spinning

wheel of the bicycle and charges a battery. Rechargeable battery, which is charged by electrical

generator, provides 5V at 500mA power. That means, every device that can be charged with a USB

connection can be charged from UTASBERY. All the components are water resistance and the total

weight of BASIC kit is 500g.

Why use UTASBERY?

UTASBERY can be used as a power bank for your mobile device whenever you need it. You do not need

to think about charging it, it charges while cycling. At the same time, UTASBERY can be used to power up

a bicycle lights at night. In addition to that, we offer a small bicycle computer that keeps track of all

important information while cycling.

How to set it up?

UTASBERY can be used on any type and size of the bicycle.

UTASBERY is easy to set up and it can be done just in 5 minutes and does not require any special tools.

Two magnets are attached to the front wheel with 2 screws, each. The generator has to be attached to

the fork, using 2 screws. When the wheel spins, the magnets have to be maximum 4mm from the

generator and they should not make contact. The battery is attached on a handlebar on the special

battery holder that also has contacts to charge a battery. A mobile phone holder is attached on a

handlebar and can be used for any mobile phone.

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What is in the package?

Our company’s system is made up of component products intended for both combined and individual

use. Therefore spare components can be provided at the customer’s request. At the moment we offer

two different kits: Basic and Premium. Customers can choose a kit depending on their needs and price

they want to pay. Both packages include:

high speed overload protection

simple installation instructions

light weight device

waterproof safety

Basic Kit

The basic kit includes all the parts that are required for a

proper and operation of the core device:

2 x magnets

1 x generator (cable for charger)

1 x lithium ion battery

1 x battery holder

1 x phone holder

Premium Kit

In addition to the Basic package we offer an extra battery

which will increase the charging performance and a

bicycle computer to help you monitor the status of

different features:

Battery level

Speed

Distance

Temperature

Lights status

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Performances

The lithium Ion Battery runs at 3.7V 2200mAh, with a charging time that can vary depending on the

bicycle speed (shown in a table below). The battery will provide an output of 5V and 500mA. The same

figures apply for a PC, USB 2.0 connection, meaning that the battery will be able to charge at the same

speed as most computers.

The table below shows the dependency between the charging and the cycling speed

Table 1: battery charging time

Once the device is fully charged, the power coming from the wheel will not be lost, but used to charge

the battery mounted on the biked. A fully charged battery will be able to provide enough power to

charge 70% of an iPhone’s battery.

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Principles behind the design

The process starts with the usage of 2 magnets attached on the front wheel. On the fork blade we have

a stationary magnet with a coil of wires. Each time the wheel completes a spin, the 2 magnets will pass

the stationary one, creating a changing magnetic field, which generates an electrical output.

From here the power is transferred in two different directions. Wires will conduct the power directly to

the lights and to the lithium ion battery. The output of the battery will be able to supply enough volts

and amperes to power an electronic device, via an USB connector.

The output will of course depend on the speed of movement and the variations can be noticed both in

voltage and current, but at all times it will be an Alternative Current (AC), above 6V. The voltage

regulator, plus a diode bridge and 3 capacitors do the AC to DC conversion, so that the power can be

used for your electronic device.

The VK2200 LCD offers relevant data about the

current state and is controlled with an

ATmega328P, running at a frequency of 16MHz.

Figure 1: Bicycle Computer

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5. Industry overview The success of our product depends on the development of two worldwide major industries:

smartphones – estimated value of $300 billion

bicycles – estimated value of $60 billion

The increase of bike users is due to its characteristic of recreational or fitness activity and other factors,

such as the growing traffic congestions and the rising fuel prices. This results in a growing demand of

low-cost transportation in developing countries, which help this industry to thrive.

Although the product will be available to all european countries, we want to focus on the countries

where cycling is most popular. This includes the scandinavian countries, plus other countries with a

strong culture regarding cycling, such as: Netherlands, Germany, Switzerland and Spain.

At the same time there are other countries outside Europe, where this culture is under development.

Therefore, expanding our horizons and including countries as Japan, China or even South Korea can be a

good market to explore. Percentages of people using bikes in these countries grow year after year. Just a

quick look at the statistics unveils the potential behind this future markets.

Table 2: number of bicycles outside Europe

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5.1. Prediction model The current figures are again, on our side. The increase in smartphones usage is fairly obvious for every

average person and we can all see it around us. At the same time, the number of bikes is going up as

well, but maybe not as many people manage to notice this change.

Here we can see

how the number

of smartphones

users has

increased

annually, since

2007 till 2013.

Graph 1: smartphones users

Although it doesn’t have the same

amplitude or stability, the number of

bikes has been and is increasing. The

table on the left shows the development

of bicycles production from 1950 till

2010.

Graph 2: number of bicycles

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5.2. Survey The survey was performed on 24 individuals with 8 of them being women. We advertised our survey on

social networks (Facebook) and although the contributors are anonymous we tend to believe that most

of them have their residence in Denmark. This process provided us with plenty of relevant data, directly

from the source:

80% of the people involved were willing to buy this product, if it would be available, but they

wished to pay a price within the 300 – 500 DKK range.

The top 2 most important features they want to see in our product, are price and quality (as

expected)

Graph 3: survey. Most important features in the product

The following diagram describes the likeliness of people recommending our product to other

acquaintances, after making use of it. The answers are based on a scale from 1 to 10 (1 – not likely at all,

10 – extremely likely).

Graph 4: survey. Would you recommend our product?

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Since the group we target is represented by bicyclists, we wanted to know how many of the survey

contributors use a bike as a way of getting from one destination to another. Surprisingly, only 36.5% of

them use a bike as their main vehicle of transportation, a figure which is equal to the percentage of

people who prefer the public transportation.

Graph 5: survey. What means of transportation do you mostly use?

Judging by this chart, and with the risk of sounding a bit too optimistic, we could say that our product

can stir up the interest of persons who are not involved in the biking activity.

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6. Competition Although it sounds like a fairly new technology, this range of devices has been on the market for

approximately 2 years now. Not a very long time, but still it was enough for some brands to make a

name for themselves. Taking in consideration the performance factor, our biggest competitor would be

“Tout Terrain The Plug III”, which offers a better design, but at a much higher price: 1200 DKK. Judging

by our surveys, most of the potential customers are not willing to pay more than 300 – 500 DKK for our

device or similar ones, therefore we would be able to get ahead of our primary rival, so to speak.

There are other available devices as well, under different names but offering more or less the same

services:

“Busch and Muller eWerk”

“Pedal Power Plus V4i Cable and Battery”

“Zzing Battery Kit”

“BioLogic ReeCharge”

“LightCharge USB Charger for Dynamo ”

From all of the above, only the last 2 are able to

offer their device at a price of less than 600 DKK,

but they do not excel on the features side.

The “BioLogic ReeCharge”, for example, is not

detachable, making it very vulnerable to theft and

the “LightCharge USB Charger for Dynamo” does

not include a battery and so it is not possible to

charge a device post-ride.

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7. Marketing plan

7.1. Promotional strategy The promotion strategy will be based on two different branches:

Social networks, this includes Facebook and Twitter

Giveaways

On the official Bike ‘n Charge Facebook group, people will be informed about the latest news in the

company: new products, special offers, season sales and giveaways. During the winter holiday season,

we will offer special discounts to all of our customers. Special T-Shirts with the Bike ‘n Charge logo will

be given away for the first 100 customers.

We will also approach the professional market by presenting our products to bike producers and service

shops. By going directly to companies which manufacture bicycles we can establish a more stable

agreement, rather than selling it online, to one customer at a time. Also, by contacting local shops

specialized in offering services for cyclists, will put us in the position of having more contact with our

possible customers.

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7.2. Pricing This represents a key factor for getting the attention and the interest of the costumers; therefore we

need to offer a fair price for our products. For producing a basic kit, the costs rise up to an amount of

200 DKK, whereas the premium kit has a production cost of 300 DKK.

These both are satisfactorily figures, because according to our surveys, people are willing to spend 300

up to 500 DKK for such a device. Therefore, the price for buying a basic kit will be 400 DKK and the

premium one will be available at a price of 600 DKK. In this way, we will make a profit of 200 – 300 DKK

per every kit that we sell, which means a mark of 100%. In addition, every order that includes more than

3 kits will be offered a spare component, which will be chosen at the customer’s will.

Buying the components separately for putting together a kit, would be more expensive, of course. Still,

as stated before, we will provide individual parts, at the following prices:

Bicycle computer – 150 DKK

Battery – 130 DKK

Magnet – 110 DKK

Generator – 100 DKK

Holder – 80 DKK

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7.3. Target market As the name suggests “Bike ‘n Charge” focuses on a specific target market: cyclists. The term describes a

very wide area, involving significant numbers which can go up to the order of billions. Out of a 7 billion

population, the number of worldwide cyclists is estimated at approximately 2 billion. The figure includes

not only commuters but tourists, as well.

Graph 6: cycling as main mode of transport (% of population) by countries

Cyclists who use a bike on a daily basis for getting to school/work or maybe just around the city, can

benefit from our product. The reason for this is that they do not need to worry about always

remembering to plug their smartphones to a power outlet, every night before going to bed. Or maybe at

the end of the day the smartphone's battery is dead and its use is urgently necessary. At this point you

know that you have a fully charged battery, which was the result of a morning bike ride.

People who like to spend their free time in an active way, may choose to go for a bike tour. In that case,

most of the times they will need to use a phone as a GPS. We all know how fast it discharges then. The

use of our product would help them forget about the risk of losing their navigation system in the middle

of the tour. Sometimes a tour can involve several days, turning into a road trip. Therefore, it is very easy

to recharge it, just by taking off the battery from the bike.

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The age group of the target market is 14 to 50 years old, so it comes close to no limitations. However, it

can be split into 3 different groups, because there are different needs to ride a bike, depending on age.

Most likely people in the age group of 14 to 18 years,

ride a bike to school or for fun, maybe both. This

means, that we have to offer them a product, which

looks entertaining and some additional features like

an LCD display, to make it more appealing.

Figure 2: children cycling to school poster (graph)

The second age group is 18 to 30 years old which more or less represents adults, mature people. This

includes students and the working class as well. These people go to work or school on a daily basis and

need the device to run at a high performance. Therefore the basic package, with an addition of a

secondary battery could suit them best.

Last but not least we have the age group going from 30 and up to 50 years old, representing the middle

aged class. A “fancy” product might not be necessary, but quality and high performance are still

necessary. Therefore, the basic package could be more than enough, but at the same time, depending

on the personal activities and lifestyle, the premium one would be more suitable.

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7.4. SWOT analysis

Strengths Weaknesses

Cheaper

Fast charging time

Touchless dynamo

Additional features

Easy to set up

Production in Denmark

Slightly heavier

Small production

Insignificant chance of theft

Lack of reputation (we haven’t established

ourselves as a reputable provider)

Opportunities Threats

Government programs promoting eco-

friendly solutions

Growing consumer market in the

smartphone & biking industry

Almost no limitations to the age

coefficient

Electrical bicycles

Weather conditions preventing people from

cycling

Similar products available on the market

Table 3: SWOT analysis

The SWOT analysis was made to compare our product with already existing products in the market, also

to see the opportunities and threats that we might face in the future.

At the moment, our product has more strengths than weaknesses compared with the products that are

already in the market. During time we are sure that we will be able to deal and diminish most of them, if

not all.

Our design can offer faster charging time than others; however that adds weight on the bicycle.

UTASBERY uses a touchless dynamo system to generate energy that means no friction. Moreover,

UTASBERY is manufactured in Denmark, Copenhagen, one of the biggest cyclist cities.

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In the beginning we will have to deal with the other products that have already seized the market. With

good advertising and quality products we will be able to change this, making a name for ourselves and

winning the loyalty of the customers. The long distance threats will be the increase in sales of electrical

bicycles. Using an electric engine, it will also be able to offer power that can be used to charge a device.

7.5. FAB analysis

Features Advantages Benefits

Charges a battery/phone while cycling Easy to mount High performance

No need for external power supply Energy saver Long term investment

No worries if your phone’s battery runs out of power. Environmentally friendly device Personal contribution to the environment

Table 4: FAB analysis

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7.6. PEST analysis In collaboration with the SWOT analysis, we also used another analytical business tool to help us

determine our current and future situation, which is the PEST analysis. To get a better understanding of

the related internal and external factors that will affect the performance and activities of our business.

This includes government regulations and legal factors, but the main issue addresses to political

stability, tax guidelines and trade regulations. At the same time the current situation shows that

governments support the idea of cycling by putting together bike sharing programs, due to its

promotion of increased mobility and safer streets for everyone, from the transportation point of view.

Today more than 500 cities in 49

countries host advanced bike-sharing

programs, with a combined fleet of over

500.000 bicycles. Copenhagen’s famed

Bycyklen – City Bike program, was an

inspiration to many cities and countries,

after operating for 17 years with more

than 1.000 bicycles.

Graph 7: countries with bike sharing programs

This resulted in a wide spread of the programs:

Spain – 132

Italy – 104 France – 37

Germany – 43

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We need to take in consideration and examine the economic issues that are bound to have an impact on

the company, such as international economic growth or changes in interest rates. We want to make it

possible for our customers to be able to make the payments in installments if necessary, with an

additional interest. Therefore the development of interest rates and inflation represents a concern,

which we need to analyze.

Graph 8: market forecast of one ad five year interest rates

Regarding this, the future doesn’t look too bright, with an increase in interests, but of course it should

also be noted that economists and markets have a woeful record of predicting rates. It was only several

years into the crisis that both sides stopped predicting rate rises were around the corner.

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Depending on the region and country, the socio-economic environment of the market can vary.

Therefore our business requires an analysis via elements like cultural limitations, lifestyle attitude or

population growth rate. By using these factors, we can understand how consumer needs are shaped and

what brings them to the market for a purchase.

For overcoming these obstacles we will need to provide top-level support, assuring the customers of a

minimal risk with management and administrative support. A clear and well defined path will help in

breaking through conservative cultures, which by nature, are not innovative.

Estimates of population evolution in

different continents, from 1950 up to

2050, shows a continuous growth in

the world wide population, according

to the United Nations (UN).

Graph 9: estimates of population evolution in different continents. (The vertical axis is logarithmic and is in millions of people)

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In this case the technological factor has a positive impact on the introduction of our product into the

marketplace. The advancements and the lifecycle of technologies will offer us the necessary

sustainability and at the same time, further developments could require our support. With new

technology coming in, the customers may want certain additional features to an already purchased

product, turning to us for support within the matter.

The use of internet will also facilitate our marketing strategy, making it easier for potential customers to

find and order our products, without any considerable efforts.

Figure 3: internet users by country

On the construction side, we have the automated processes which will increase our production rates

and at the same time, lower the costs. Impact of emerging technologies, could also act as a downside.

The development of electric bicycles might be a big hit for our product, and not in a good way. Such

means of transportation, could easily add the functionality of powering your phone from an already

existing battery, therefore excluding the necessity of our device.

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8. Financial plan The purpose of making this financial plan was to reflect the estimated costs and revenue structure for

the products that we sell, within our company. It will help us provide a reasonable assurance that there

will be sufficient financial resources available for us to implement the product into the market and

complete the project as planned. The financial plan should clearly explain the assumptions about both

costs and revenues.

Opening day balance sheet

The company will start operating from the 1st of January, 2015 and the following table shows where we

will stand at that time. Our personal investment will be of 50.000 DKK (25.000 / partner) and besides

that we will also be in possession of furniture, PCs and necessary equipped, with a combined value of

11.000 DKK. For the first 2 months of the year, we were able to get a credit from our suppliers.

Therefore, we will start paying our

suppliers from the 1st of March, and

not from the beginning of the year.

In the end we will have a total liability

and net worth value of 61.000 DKK.

Graph 10: opening day balance sheet

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Break – Even analysis

After the starting point, we need to know how much we need to sell in order to keep our business

afloat. The break – even analysis helps us determine the point at which the incomes received equals the

costs associated with receiving the income. Using the same analysis we can calculate a margin of safety,

referring to the incomes that exceed the break – even point.

The following chart, which applies for a single month, shows that our break – even point is situated at

10.000 DKK and 20 units. Since we want to sell 2 kits, the basic one for 400 DKK and the premium for

600 DKK, we made an average per unit. This means the price per unit, in the table below, is of 500 DKK.

Graph 11: break – even analysis

We expect a higher rate in selling the basic kit, therefore a combination of 11 basic kits, plus 9

premiums, will result in an income of 9.800 DKK. This is the minimum income we need, for keeping the

business alive.

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12 months profit and loss projection

The 12 months profit and loss projection table is attached in appendices (Graph 14). It shows the

forecast for sales, variable costs, gross profit, fixed costs, taxes to be paid and total profit for each

month and total of the year.

We are expecting to sell more of the Basic Kit units than Premium Kits for every month during a year.

The selling prices per unit are as following; 400DKK (Basic Kit) and 600DKK (Premium Kit). The first

month estimated sale of the Basic Kit is 20 units and 10 Premium Kit units, which give a 57.1% of total

sales for Basic Kit and 42.9% for Premium Kit of all incoming sales. In March, we are expecting to sell 10

units of each Kit more than in the first two months and that brings 50% of total sales for both kits.

During the year, every month we expect to sell 10 to 20 units more of each kit, since our market target

group is bicycle users we predict that in the summer months and September, we are going to sell 140

units of Basic Kit and 120 units of Premium Kit, which gives 56.000 and 72.000DKK (43.8% and 56.2% of

sales). The markup of both kits is 100% and we can calculate that the gross profit of each month is half

of the sales.

The fixed costs consist of rent price (utilities are included) and advertising. Advertising will vary from

month to month, but we are willing to spend an average of 1% of sales in the first year.

If we will be able to achieve the set objectives, our company will start making a profit from the first

month of the startup. The total profit will increase the most in September, up to 38.000DKK. The total

profit after taxes in 12 months will be 226.368DKK.

Cash Flow Projection

The cash flow projection table is attached to the appendices (Graph 13). The 12 months cash flow

projection shows how much money we will have coming in and out of the business each month during

the year and a total, at the end of the year.

We have liabilities to suppliers of 14.000DKK which is what we need to cover variable costs for the first

two months. We will start paying to the suppliers from March for January, in April for February and so

on.

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In the cash paid out category we added Owners’ withdrawal which will be 20.000DKK each month.

In the table, we can see the total cash in hand in the beginning of the month, in the end of the month

and total cash position in the end of year. We will finish the year with a debt of 103.000DKK to suppliers

for November and December; this amount will need to be paid in the first two months of the next year.

Final balance budget

At the end of the year we end up with a total of 273.368 DKK, representing our cash money. During the

year some of our assets, such as furniture and PCs, depreciated. The PCs depreciation rate is of 10% per

year, resulting in 1000 DKK, in our case. The furniture depreciates at a higher rate, leading us to 200 DKK

per year.

Graph 12: final balance budget

Assets:

237,900

237,900

9800

9800

247,700

Liabilities & Equity

103,000

103,000

103,000

47,000

226,368

Sum 273,368

144,700

Total liabilities and equity 247,700

Equity by end of year

Ultimo

Primo

Liabilities grand total

Short term liabilities

Cash in hand

Bank

Short term assets

Grand total assets

Long term assets

Final balance budget, DEC 31, 2015

Furniture & PCs

Suppliers

32


9. Conclusion Through this study we observed a market which provides us with the possibility of a successful

approach, due to a continuous growth in both the bicycle and smartphones industry. Our analysis

reveals the opportunity of surpassing our competitors in various ways, the most important factor being

the price. Its cost is insignificant compared to other means of transportation, but it manages to provide

many opportunities for the users.

At the moment we have the necessary technology and technical skills for manufacturing and offering a

good quality for our products, which is a crucial factor in attracting the clientele. At the same time, our

financial plan will stand as a reminder of our short and long term objectives, resulting in an assurance of

meeting our business goals.

On the long term, 3 – 5 years from now, we anticipate an increase of approximately 50% in our profit.

Also, the future of this industry and of the environment as well, will be positively impacted by the usage

of our device.

33


10. Figures, graphs and tables Figure 1: Bicycle Computer……………12

Figure 2: children cycling to school poster (graph) ……………21

Figure 3: internet users by country……………27

Graph 1: smartphones users……………14

Graph 2: number of bicycles……………14

Graph 3: survey. Most important features in the product……………15

Graph 4: survey. Would you recommend our product……………15

Graph 5: survey. What means of transportation do you mostly use? ……………16

Graph 6: cycling as main mode of transport (% of population) by countries……………20

Graph 7: countries with bike sharing programs……………24

Graph 8: market forecast of one ad five year interest rates……………25

Graph 9: estimates of population evolution in different continents. (The vertical axis is logarithmic and is

in millions of people) ……………26

Graph 10: opening day balance sheet……………28

Graph 11: break – even analysis……………29

Graph 12: final balance budget……………31

Graph 13: Cash flow……………………..38

Graph 14: Profit & loss………………….39

Table 1: battery charging time……………11

Table 2: number of bicycles outside Europe……………13

Table 3: SWOT analysis……………22

Table 4: FAB analysis……………23

34


11. Bibliography http://www.globalsherpa.org/amsterdam-bike-riding-capital-world

http://www.earth-policy.org/plan_b_updates/2013/update112

http://www.worldometers.info/bicycles/

http://blogs.wsj.com/speakeasy/2012/05/21/why-asia-is-a-hub-for-bikes/

http://pestleanalysis.com/what-is-pest-analysis/

http://cyclingabout.com/list-of-hub-dynamo-power-supplies-for-usb-devices/

http://supernova-lights.com/en/products/the_plug.html

http://www.earth-policy.org/indicators/C48/bicycles_2005

http://www.globalsherpa.org/amsterdam-bike-riding-capital-world

http://www.earth-policy.org/plan_b_updates/2013/update112

http://www.worldometers.info/bicycles/

http://blogs.wsj.com/speakeasy/2012/05/21/why-asia-is-a-hub-for-bikes/

http://pestleanalysis.com/what-is-pest-analysis/

http://cyclingabout.com/list-of-hub-dynamo-power-supplies-for-usb-devices/

http://supernova-lights.com/en/products/the_plug.html

http://www.earth-policy.org/indicators/C48/bicycles_2005

35


12. Appendices – Survey & Budgets

Dynamo-Powered USB Charger for Smartphones Imagine you have a device that could charge your phone while cycling to work, school, or maybe just for fun. It would be able to power your device using only the energy generated by pedaling your bike. What is your gender?*

Male

Female What is your age?*

Under 18

18 - 20

20 - 23

23 - 25

25 – 30

Over 30 Do you own a bicycle? *

Yes

No

What’s your first reaction to this new product idea? *

Very positive

Somewhat positive

Neutral

Somewhat negative

Very negative

36


How often, if ever, do you currently use other, similar products? *

Extremely often

Very often

Moderately often

Slightly often

Not often at all How useful would this product be to you? *

Extremely useful

Very useful

Moderately useful

Slightly useful

Not useful at all If this product were available today, how likely would you be to buy this product?*

Extremely likely

Very likely

Moderately likely

Slightly likely

Not likely at all

How much would you be willing to pay for buying this product?*

Less than 200 DKK

200 - 300 DKK

500 - 600 DKK

More than 700 DKK

How likely is it that you would recommend our new product to a friend or colleague?*

1 2 3 4 5 6 7 8 9 10

Not at all likely Extremely likely

37


When you consider new products in this area, what are the top 2 things you generally consider?*

Price

Performance

Innovation

Quality

Endurance What means of transportation do you mostly use?*

Public Transportation

Bike

Personal car How often do you go on a bike road trip? (More than a day)*

2 - 3 times per month

Every month

Every 2 months

Every half a year

Once a year

Very rare

Never

38


Graph 13: cash flow

39


Twelve-month profit and loss projection Bike 'n Charge Fiscal Year Begins Jan-15

Jan

-15

% B

/A

Feb-1

5

%

Mar-

15

%

Apr-

15

%

May-

15

%

Jun-1

5

%

Jul-15

%

Aug-1

5

%

Sep-1

5

%

Oct-

15

%

Nov-1

5

%

Dec

-15

%

YE

AR

LY

%

Revenue (Sales)

Basic Kit 8,000 57.1 8,000 57.1 12,000 50.0 16,000 47.1 20,000 45.5 28,000 40.0 32,000 40.0 44,000 44.9 56,000 43.8 48,000 44.4 44,000 44.9 48,000 44.4 364,000 44.4

Premium Kit 6,000 42.9 6,000 42.9 12,000 50.0 18,000 52.9 24,000 54.5 42,000 60.0 48,000 60.0 54,000 55.1 72,000 56.3 60,000 55.6 54,000 55.1 60,000 55.6 456,000 55.6

Total Revenue (Sales) 14,000 100.0 14,000 100.0 24,000 100.0 34,000 100.0 44,000 100.0 70,000 100.0 80,000 100.0 98,000 100.0 128,000 100.0 108,000 100.0 98,000 100.0 108,000 100.0 820,000 100.0

Variable Costs

Basic Kit 4,000 50.0 4,000 50.0 6,000 50.0 8,000 50.0 10,000 50.0 14,000 50.0 16,000 50.0 22,000 50.0 28,000 50.0 24,000 50.0 22,000 50.0 24,000 50.0 182,000 50.0

Premium Kit 3,000 50.0 3,000 50.0 6,000 50.0 9,000 50.0 12,000 50.0 21,000 50.0 24,000 50.0 27,000 50.0 36,000 50.0 30,000 50.0 27,000 50.0 30,000 50.0 228,000 50.0

Total Variable Costs 7,000 50.0 7,000 50.0 12,000 50.0 17,000 50.0 22,000 50.0 35,000 50.0 40,000 50.0 49,000 50.0 64,000 50.0 54,000 50.0 49,000 50.0 54,000 50.0 410,000 50.0

Gross Profit 7,000 50.0 7,000 50.0 12,000 50.0 17,000 50.0 22,000 50.0 35,000 50.0 40,000 50.0 49,000 50.0 64,000 50.0 54,000 50.0 49,000 50.0 54,000 50.0 410,000 50.0

Fixed Costs

Advertising 2,200 15.7 500 3.6 200 0.8 200 0.6 200 0.5 500 0.7 500 0.6 700 0.7 1,000 0.8 200 0.2 100 0.1 800 0.7 7,100 0.9

Rent 4,000 28.6 4,000 28.6 4,000 16.7 4,000 11.8 4,000 9.1 4,000 5.7 4,000 5.0 4,000 4.1 4,000 3.1 4,000 3.7 4,000 4.1 4,000 3.7 48,000 5.9

Depreciation 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1,200 1.1 1,200 0.1

Total Fixed Costs 6,200 44.3 4,500 32.1 4,200 17.5 4,200 12.4 4,200 9.5 4,500 6.4 4,500 5.6 4,700 4.8 5,000 3.9 4,200 3.9 4,100 4.2 6,000 5.6 56,300 6.9

Net Profit 800 5.7 2,500 17.9 7,800 32.5 12,800 37.6 17,800 40.5 30,500 43.6 35,500 44.4 44,300 45.2 59,000 46.1 49,800 46.1 44,900 45.8 48,000 44.4 353,700 43.1

Taxes 36% 288 2.1 900 6.4 2,808 11.7 4,608 13.6 6,408 14.6 10,980 15.7 12,780 16.0 15,948 16.3 21,240 16.6 17,928 16.6 16,164 16.5 17,280 16.0 127,332 15.5

TOTAL 512 3.7 1,600 11.4 4,992 20.8 8,192 24.1 11,392 25.9 19,520 27.9 22,720 28.4 28,352 28.9 37,760 29.5 31,872 29.5 28,736 29.3 30,720 28.4 226,368 27.6

Graph 14: profit and loss

final report - osvaldas banys & petru simion

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